Wanna thank you for taking your time and looking into this. Hopefully you can sort out if it's viable to use in a TAS or if it was just a one-time thing.
I do find the theory about backpack guy causing so much fuzz kinda amusing however.
You are in a glitched version of Wily 3. You can continue in that stage by just climbing down (all red blocks are ladders). But no boss will spawn and the stage still counts as being in Woodmans stage. This glitch has a number of setups, but on that stage they all lead to glitched Wily 3 without a boss. A similar glitch can be done on Heatmans stage that sends you to Wily 1 and lets you kill the dragon. But killing the dragon will count as just killing Heatman.
Someone can please correct my if they are wrong, but what you basically did is that you zipped to the room after the boss. That room just happens to be one of the Wily 3 rooms. I think Heatman goes to W1 and bubble goes to W4. It has no known use.
Ah, so he used the 'end' option multiple times instead of starting from a fresh power-on. As we saw in Ghosts 'n Goblins, it's possible that something wasn't reset. It might be worth noting that on his attempt immediately before the glitch, he made it to the boss.
Interesting to note what happened when the glitch occurred. The character stopped responding (even though he was holding right and tapped the button once) and the end-of-level music came up before he had the falling death. The death part seems irrelevant.
I believe the stop on the platform technically is irrelevant too. As before the loss of control the explosion sequence should occur if the stage is ended. Once you kill a boss it takes a few seconds before you actually lose control.
But him using the "End" option instead of reset was something I was not aware off. That changes my view on this glitch.